Anthropology of East Europe Review

RUSSIAN AND THE DENIAL OF HISTORY: AN ANALYSIS OF THE WORLD BANK'S NOTION OF DECENTRALIZATION

Jarrett Zigon, CUNY Graduate Center

The World Bank often characterizes 's coherent governmental system of rules, we quickly decentralization process as putting the cart before the learn the World Bank's 'suggested' substance of horse. Among other things, analysts use this these rules. The remainder ofthe decentralization metaphor to represent the troubling fiscal policy of chapter is used to flesh out the three areas that should "subnational spending decisions ... being revenue­ constitute the substance of these coherent rules, viz., driven, rather than revenues being expenditure­ "the division ofnational political power between driven" (Bahl and Wallich 1996:327). I would like to national and subnational ; the structure, use this same metaphor to represent the functions, and resources assigned to subnational decentralizing transition ofRussia, but in an entirely governments; and the electoral rules and other different manner. For it is true that Russia did put the political institutions that bind local politicians to their cart before the horse from the beginning of its post­ constituents" (ibid. 112). Soviet transition. But what I mean to indicate by In themselves, I find it difficult to argue using this overused metaphor is that Russia against any of these suggested areas of concern. In implemented a decentralization strategy long before fact, they seem to be the basic building blocks of any it had the institutional base to administer these well-functioning and legitimate democratic reforms successfully. To put it simply, Russia . But if this is true, why is the Russian decentralized long before it should have. government currently not a well-functioning One need not be an astute observer of government? For in general, Russia has Russian history to come to this conclusion. Rather decentralized according to the three coherent rules the slightest appreciation ofRussia's Soviet history delineated by the World Bank. I will show that the would produce an understanding ofthe uniqueness of very implementation ofthe 'universal lessons' Russia's recent past and current transition. For as suggested by the World Bank was the cause ofthe many critics ofthe Russian decentralization process current instability of the Russian government. Thus, point out, the complexities of the Soviet legacy are by putting the decentralization cart before the horse too deep to expect a transition that resembles other of institution-building, Russia very early on took the transitions from authoritarian regimes (e.g., Lapidus path that inevitably led to economic and 1995:1-4; Shevtsova 1995:8; Aslund 1997:13). This governmental crisis. unique historical path of Russia is not considered by I am not suggesting, however, that the World Bank consultants, despite their rhetoric of World Bank or any other Western lending institution adapting decentralization programs to a "'s is causatively responsible for the egregious Russian prevailing conditions" (World Bank 2000: 111). transition. What I do hope to show, on the other In fact, a closer reading of the World hand, is that by decentralizing more or less according Development Report 199912000 shows that the to the universal prescriptions of the World Bank, and World Bank is more interested in implementing as early as it did, Russia took the path that led to 'universal' patterns of decentralization, rather than crisis. This path may have been unavoidable adapting decentralization programs to a "country's considering key elements of the decentralization prevailing conditions" (ibid. 111). For the ink must process were the result ofthe very break up ofthe have been barely dry on the words 'prevailing . However, the pressures applied by conditions' when analysts wrote: "the experience of Western lending institutions, such as the World Bank, the past 15 years has yielded some universal lessons, and Western governments cannot be easily which currently decentralizing can use to disregarded. For the continuous "analytical work and their advantage" (ibid. 111-2). The primary universal dialogue" on the topic ofdecentralization practiced lesson learned by the World Bank is that of "the need by the World Bank with Russian officials for a coherent set of rules to replace the hierarchical (www.worldbank.org:2000), must have made it system of governance characteristic of centralized abundantly clear to the Russians what was expected systems" (ibid. 112). But before the reader ofthe in order to receive badly needed loans. development report has time to suspect that these As just stated, a major portion of the early rules can be adapted to contextual conditions, for decentralization process was a result of the break up who could possibly argue against the need for a

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of the Soviet Union itself. As Vasiliev argues, the Wallich 1996:324). Thus what Russia needed in the "disintegration of the vertical power structures of the early-1990s, as Shevtsova points out, was "not only former Soviet Union prompted various of to build a new economy and a new regime but to Russia to demand . Centralized authority reconstruct at the same time the structures within Russia [had] been greatly undermined ... As a needed to carry out these tasks" (1995:8). Perhaps if result [of this power vacuum], local [or subnational] Western advisors, like those of the World Bank, had government[s] ... retained much more of [their] recognized the situation and the historical power than the " (1997:36). Just motivations driving it, for many ofthe and as the Soviet Union was a , so too Russia is regions were motivated by ill-feelings for their old a federated state. Thus the autonomous republics and relations with the Soviet center as much as with the regions of Russia are tied to the latter in the same Russian center, decentralization would not have been way Russia was tied to the Soviet Union. Because of so assiduously pushed. this relationship there was a great deal of fear in But this is not to be expected. For as former in the early days ofthe Soviet breakup that chief economist of the World Bank Joseph Stiglitz the various republics, regions and ofRussia himself points out, the Western macroeconomists would similarly claim (Lapidus and who advised the Russians "typically had little Walker 1995:83). It did not help matters that Boris knowledge of the history or details of the Russian Yeltsin, the president ofthe newly sovereign Russian economy and didn't believe they needed any. The Federation, had supported the sovereignty of the great strength, and the ultimate weakness, of the various republics and regions ofthe Soviet Union. In playing the regional card against the centrist hand of economic doctrines upon which they relied is that the doctrines are - or are supposed to be - universal. Gorbachev, Yeltsin "threatened to undermine Institutions, history, or even the distribution of Russia's territorial integrity as much as the USSR's" (ibid. 85). income simply do not matter" (2000:6). Let us return to these 'universal lessons' in order to show how This is precisely what happened as center­ their hasty implementation have significantly periphery relations have been the primary contributed to the current instability of the Russian destabilizing problem of the 1990s. These relations Federation. were especially troubling from late-1991 through The first step of any decentralization 1993 when various republics and regions, such as process, according to the World Bank, is to establish and Chechnia, were doing everything from "the division of national political power between claiming economic autonomy to declaring national and subnational governments" (World Bank sovereignty. It was in this context that Moscow 2000:112). Ideally the rules governing this struggled at the same time to keep the federation relationship should be established at the national together and to satisfy Western calls for 'shock level. For this is the most effective means of therapy' decentralization and privatization (Aslund avoiding the central government becoming "a 1997:11-12; Cohen and Schwartz 1998). This was prisoner of subnational interests" (ibid. 114). But the moment Russia needed to build stable central this is precisely what was not able to happen in institutions not decentralize. Unfortunately, the Russia. How could it have? There was no stable World Bank and other Western lending institutions national government to establish a coherent system of "focused on [decentralization and] privatization with rules. For prior to the 'Second October Revolution' the intensity of a laser beam and ignored the wide­ of 1993, the federal government was characterized by ranging institutional development Russia sorely the power struggle between the executive and needed" (Blasi, Kroumova and Kruse 1997: 172). legislative branches. Because each quarreled with The mistake in the West was thinking that the other over who should control the government, in Russia retained the strong central government and effect, no one controlled the national government for institutions of the Soviet Union. This was not the two years. Thus, rather than the strong central case. The Soviet Union no longer existed. And bureaucracy imagined by some Western observers, while the new Russian government may have Russia's federal government was, in fact, powerless inhabited the old governmental buildings of the (Shevtsova 1995: 11) . It was this stalled central USSR, the Soviet government no longer existed government with whom the republics and regions either. Rather than a stable unified government, the negotiated their relations to the federation. The latter new Russian government consisted of a series of ad held the power in these negotiations, not the center. hoc negotiated relations with each of the republics For often the regional elites played the central and regions having established a different fiscal and executive and legislative branches off of one another political relationship with the center (Bah! and in order to acquire the best deal they could.

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" :Ii :1 II The World Bank agrees that Russia's central expenditure responsibilities. Thus, at least part of the iii il. government has been held prisoner by subnational reason for the decentralization of functions to the Ii, interests from the beginning. Nevertheless, the subnationallevel has been in response to the i'l I, World Bank since 1992 and continuing to this day unilaterally invoked fiscal restrictions on the central supports further decentralization in the Russian government from below. It is this fiscal dilemma that 1,1 Federation. I disagree entirely with this program. In the World Bank rails against with its metaphor of the " such an atmosphere central institution-building was cart before the horse. But this situation was nearly and still is needed, not decentralization (Cohen and unavoidable considering the power vacuum in Schwartz 1998). Again, I am not arguing that the Moscow in 1991-93. Because the subnational lack of central institution-building in Moscow in the governments held the upper hand in the negotiation early 1990s was a causative result of Western process with the center, they were able to keep the pressures to decentralize; however, such pressures as locally advantageous tax system from the Soviet there were did not help.l Union in place. However, this tax system in itself is not necessarily a flawed system. But it requires The second category ofrules outlined by the strong state institutions that are able to enforce tax World Bank focuses on the structure, function, and and ensure the transfer oftax revenues to the funding of subnational governments (World Bank center. Such central institution-building did not 2000:114). I will not concern myself with the occur, for these strong state institutions were structures of the subnational governments, for they in considered by Western advisors ofRussian reformers many ways resemble the structure of the federal as products of an emerging market rather than the system. As far as functions are concerned, Russia result of centrally designed institution-building has decentralized very much according to the World (Bruszt 2000:21). Therefore, the World Bank and Bank plan. That is to say, the central government's other lending institutions bear some responsibility for main responsibilities lie in the realm of maintaining a the current state ofthe Russian tax system. stable political and economic environment, while the subnational governments are responsible for The third area of coherent rules needed in maintaining the social infrastructure, viz., health any decentralizing transition, according to the World programs and education (ibid. 115). I would like to Bank, is to establish "electoral rules and other concentrate on the funding ofthe subnational political institutions that bind local politicians to their governments for these functions. For as many have constituents" (World Bank 2000: 112). For the most already pointed out, the primary destabilizing factor part elections have been functionally established in ofthe Russian Federation is the intergovernmental the Russian Federation. But as Cohen and Schwartz tax administration. point out, elections alone do not create a working democracy (1998:3-4). The World Bank agrees and Unlike most states, taxes in Russia, just as astutely suggests that political democracy requires they were in the Soviet Union, are collected at the "institutions that bind local politicians to their subnationallevel and shared up. In this system the constituents" (World Bank 2000: 112). That is to say, central government is relatively helpless in collecting a political democracy necessitates institutions that are the agreed percentage of taxes from the subnational able to enforce laws that require accountability on the leveL Because ofthe impotence of the center, since part of officials to their constituents. This has not yet "mid-1992 some twenty (and by September occurred in Russia. 1993 thirty oblasts) reportedly unilaterally decided to determine what proportion of taxes they will share In addition to the role of decentralization in with the center. The shares would be lower than the neglect ofpolitical institution-building, there is those negotiated with the Ministry ofFinance" also a deep and complex lingering Soviet mentality. (McLure, Wallich and Litvack 1996:381). The This mentality is not unlike the 'Communist extreme case is natural resource-rich Tatarstan, which arrogance' that Lenin late in his career became has withheld all revenues from the center since concerned with. By this name Lenin described an 1992, and , which together with individual "belonging to the Communist party and the former has withheld an estimated 10 billion not yet turned out of it imagines that he can solve all rubles (approximately $350 million) from the center tasks by handing down Communist edicts" (qtd. in to date (RFEIRL Newsline VoL 4, No. 54, Part I, 16 Tucker 1973:402). Both subnational and national March 2000). political elites are often characterized by this mentality and rely "not on society but on the As the subnational governments have administrative apparatus ofthe ancien regime to withheld more and more revenues from the center, implement [their] program[s)" (Shevtsova 1995:9-10; the latter has in turn devolved more and more Zaslavsky 1995:124-132). Because ofthis lingering

VoL 19, No.1. Spring 2001, Page: 87 Anthropology of East Europe Review mentality, very often the public-voice falls on the Russia's second elected President, Vladimir Putin deaf ears of politicians. Further complicating the "has ruled out excessive of power to the situation is the residual effect of the "far-reaching regions" as a viable future course for Russia and has eradication of civil society" by the Soviet regime submitted a "package of laws to the State Duma that (Lapidus 1995:3). Russia is just now experiencing would 'strengthen the of the [Russian] state" by the formal organization and expression of citizens' limiting regional participation in the federal interests so often referred to as civil society. Thus, government (RFEIRL Newsline Vol. 4, No. 59, Part the public lacks the experiential knowledge and I, 23 March 2000; RFEIRL Newsline Vol. 4, No. 96, means of making their voice heard, such that, while Part I, 18 May 2000). there may be elections in the Russian Federation, Certainly there is a need for caution in there is no democracy (Cohen and Schwartz 1995:4). recentralizing the Russian state. But there is little This is a difficult dilemma for Russia, for no doubt that the "creation ofan honest and effective amount of institution-building will bring about public administration . .. is the key step toward the political democracy in the short-term. Although creation ofa successful capitalistic market system institutions can most likely affect political and afunctioning democracy" (Cohen and Schwartz consciousness in the long-term, it would seem 1998: 8, italics in original). It is too bad that this has nothing less than education, and most likely the kind only recently been recognized, or has only recently of practical education that only comes through become a possibility, in Russia. For by putting the experience, will eventually develop a democratic decentralization cart before the horse of institution­ consciousness in Russia (see Sherover 1974). It is building, Russia took the path of political and perhaps with the difficulties of this transition to a economic instability and crisis. democratic consciousness in Russia that the What is to be learned from Russia's impedible historical forces become most decentralization experience? If nothing else the conspicuous. World Bank must take from the Russian experience Concluding Remarks the realization that their 'universal lessons ' do not account for history or the specific understanding of The Russian historian Mikhail Gefter "has local situations. And because of this oversight, argued that one of the most salient characteristics of decentralization projects are prone to fail, Stalinism was the liquidation of developmental notwithstanding the compliance to these 'universal alternatives" (qtd. in Zaslavsky 1995: 115). I believe lessons.' It would appear then that Russia's failure the World Bank similarly eschews any alternatives to could provide this one positive result. If it is realized their neoliberal version of development. In doing so that Russia's decentralization failure is a result of the the World Bank has effectively attached a cognitive absence of strong central institutions that could block of local conditions to their loan requirements. eventually oversee future decentralization projects, In particular is the denial of the historical conditions perhaps such a lesson could be used to inform the and forces of the current Russian transition. To decentralization process of similarly disabled states, neglect history, as Cohen and Schwartz argue, is to such as some in Africa. However, if the World Bank "discard experience. Any remotely appropriate is unable to realize that under certain specific and historical experience - such as Europe after World historical conditions centralized institution-building War I or World War II - points in a quite different is necessary for the future success of decentralization, direction" than decentralization in Russia (1998:8-9). and instead continues to prescribe ideologically What was needed and is still needed today in motivated decentralization projects, then the World Russia is a strong central government that can Bank will continue to prescribe decentralization establish the necessary institutions by which a stable projects that end in failure. state can be maintained. 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Transformation in the 1990s. Anders Notes Aslund, ed. London: Pinter. Wedel, Janine R. 1998. Collision and Collusion: The Strange Case of Western Aid to Eastern lBeginning in 1992 the World Bank began to Europe 1989-1998. New York: St. Martin's exert continuous pressure on the Russian Press. Federation through discursive tactics. While not disbursing any loans with specific requirements Wines, Michael. 2000. Factory Turnaround Reflects for decentralization until 1996, continuous Economic Glimmer in Russia. In The New discursive pressure had been applied almost York Times. Vol. CXLIX, No. 51,407. immediately: "Because of the volatile economic, political, and administrative environment ofthe World Bank. 2000. Entering the 21 st Century: World Development Report 1999/2000. Oxford: early-to-mid 1990's, [structural and Oxford University Press. decentralization] policy reform was pursued largely through analytical work and dialogue" World Bank. www.worldbank.org (www.worldbank.org: 2000). Once the economic and political environment began to settle after the Zaslavsky, Victor. 1995. From Redistribution to Marketization: Social and Attitudinal elections of July 1996, the World Bank Change in Post-Soviet Russia. In The New accelerated a program calling for structural Russia: Troubled Transformation. Gail W. reform, and as of June, 2000 has disbursed Lapidus, ed. Boulder: Westview Press. US$4.7 billion in adjustment loans (ibid.).

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